‘UDC will drive industrial, economic development’

By Ismail Musa Ladu

In Summary

Uganda Development Corporation, the investment and development arm of government, was reestablished in 2014 Daily Monitor’s Ismail Musa Ladu interviewed UDC’s chief executive officer, Mr Emmanuel Mutahunga about the Corporation’s relevance in the wake of glaring funding challenges. Excerpts below.

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How relevant is UDC?The Uganda Development Corporation (UDC) is a body corporate established under the Uganda Development Corporation Act 2016 to promote industrial and economic development of Uganda. This objective is to be met through: establishment of subsidiary companies; entering into public private partnerships with any commercial, industrial or agricultural undertaking or enterprises, assisting in financing and management of undertakings promoting industrial or economic development through public-private partnerships, and promoting and facilitating research into industrial development.

The UDC is one of the vehicles through which Government is investing in strategic sectors of the economy where the private sector, on its own, may not be in position to invest for one reason or another. This creates more employment opportunities, increases demand for local products – given that our investments are to use primarily local raw materials, which stimulates production and creates wealth for our people.

Which sectors of the economy are set to benefit from UDC and how?Agriculture, Industry and Services are the major sectors that will benefit. The agricultural sector employs majority of the population and accounts for about one quarter of the economy. The industrial sector also accounts for about one quarter of the economy and employs fewer people than the agricultural sector, but has the potential to create more employment opportunities – and better paying ones. It can also stimulate agricultural production through agro-based industrialisation.

The country also has large deposits of minerals, which provides a good basis for mineral-based industrialisation. When you examine our import composition, you find that most of our imports are agro-processed products, or natural resource-based products to include pharmaceuticals and mineral-based products as well. We have these resources here, and the demand for their products is already established.

You are already grappling with under funding. How will you achieve your mission?We have to appreciate that resources are never enough – whether financial or human resources. Economics is about allocation of limited resources to achieve unlimited wants/needs. With this in mind, the most logical thing to do is to prioritise and properly sequence activities to be undertaken while mobilising sufficient resources to implement what has been planned at a given time. This is the route we are taking.

How much will UDC need to achieve what it has set out to do?The law, Uganda Development Corporation Act 2016, has set this at Shs500 billion for now. It is a good start for the Corporation to achieve its objectives.

What are the main challenges industries and corporations are struggling with?The main challenges revolve around macro issues – limited capital, high interest rates, lack of long-term financing, high production costs such as electricity tariffs, absence of serviced industrial parks, and wanting work ethics by our human resources; among others.

Is UDC the answer to those challenges? The answer to this is both yes and no. Yes, in the context of the objective and mandate the Corporation. No, for areas that lie outside the objective and mandate or functions of UDC. For example, through partnership with private sector to invest in strategic sectors of the economy we can help address some challenges related to capitalisation of the private sector. But, we have to look beyond UDC because the Corporation would not partner with every private sector operator and address these challenges.

You have developed a Strategic Plan, 2017/18-2032/33. What is it meant to achieve and how different is it from the National Development Plan?The National Development Plan (NDP) is the national guiding document. In fact, the National Development Plan II 2015/16-2019/20 lists revitalisation of the Uganda Development Corporation as one of the ‘core projects’. Under the objective of Promoting the Development of Value Added Industries in Agriculture and Minerals, it earmarks “revitalisation of UDC to establish model agro-processing and manufacturing industries’ as one of the key strategic interventions.

Further, under the objective of reducing interest rates, NDP II lists, as one of the strategic interventions, “creation of specialised funds at low interest rates targeting NDP II prioritised areas and channelled through Uganda Development Bank Limited and Uganda Development Corporation”.

The implementation Strategy of NDP II has prioritised strengthening the UDC, noting that “to scale up the pace of industrialisation given the weak and poorly capitalised private sector, UDC will be strengthened with a view to empower it to take responsibility for fast-tracking the country’s industrialisation”. It is clear that NDP is the broader strategy and the UDC Strategic Plan is meant to chart out the path towards attaining the broader intentions in the National Development Plan with respect to industrial development.

Since your revival, what have you achieved so far?The Act re-establishing UDC was assented to last year and became operational on June 01, 2016. Our engagements, so far, are in provision of infrastructure and social services to the Island district of Kalangala – particularly ferry transport connecting the island to the mainland through operation of two ferries with an average of 5,200 crossing per year, solar and thermal electricity through construction and operation of 1.6MW hybrid power plant – connecting 2,600 customers, upgrading of the road on the main island to first class murram covering 66kms, and piped water to 545 customers including institutions and public stand water taps.

In partnership with the private sector – the Teso Tropical Fruit Cooperative Union – and with support from the Korean Government through KOICA, we are setting up a fruit processing factory in the Soroti Industrial Park.

The civil works are virtually complete and installation of machinery is now ongoing. Farmers have been trained under the Cooperative Union and necessary infrastructure for successful operations of the factory plant has been put in place. On operations, the factory will have processing capacity of 6MT of oranges per hour and 2MT of mangoes per hour. Completion is scheduled for the first half of 2017/18.On the mineral processing side, we are setting up a cement processing plant in Karamoja . Under the Kiira Motors Corporation, we are pioneering motor vehicle manufacturing and assembly in the country.

So far, proto-types including the Kiira EV and the Kayoola Solar bus have been developed. The business plan has been finalised and we are engaging potential technology and financing/equity partners to move to the commercial phase of the investment.